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Carbon Pollution Reduction Scheme Bill 2009 [No. 2]

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5912

2008-2009

 

The Parliament of the

Commonwealth of Australia

 

THE SENATE

 

 

 

Carbon Pollution Reduction Scheme Bill 2009 [No. 2]

 

 

(1)     Clause 3, page 3 (line 24), omit “between 5% and 15%”, substitute “at least 20%”.

[target reduction in emissions: 20% by 2020]

The following amendment is an alternative, to be moved if amendment (1) is not successful

(1A)  Clause 3, page 3 (line 24), omit “between 5% and 15%”, substitute “at least 10%”.

[target reduction in emissions: 10% by 2020]

(2)     Page 204 (after line 4), after Part 7, insert:

Part 7A Electricity generation benchmark scheme

Division 1 Introduction

164A   Aim and objects

             (1)  The aim of this Part is to create incentives for the electricity generation sector in Australia to reduce emissions.

             (2)  The objects of this Part are:

                     (a)  to create incentives for abatement of emissions while mitigating the price impact of electricity wholesale prices on users; and

                     (b)  to ensure that any increase in energy costs is a gradual increase for all users; and

                     (c)  to promote lower emissions and improved price signals in relation to electricity generation; and

                     (d)  to provide orderly transitional arrangements in respect of all electricity generated in Australia until 2030.

164B   Simplified outline

                   The following is a simplified outline of this Part:

•      The regulations may formulate a scheme, to be known as the electricity generation benchmark scheme, for the issue of free Australian emissions units in respect of all electricity generated in Australia.

•      The electricity generation benchmark scheme may:

               (a)     require a recipient of free Australian emissions units to relinquish units; and

              (b)     impose reporting or record-keeping requirements on a recipient of free Australian emissions units.

Division 2 Formulation of the electricity generation benchmark scheme

164C   Electricity generation benchmark scheme

             (1)  The regulations must formulate a scheme (to be known as the electricity generation benchmark scheme ) for the issue of free Australian emissions units in respect of all electricity generated in Australia.

             (2)  For the purposes of regulations made under subsection (1) the allocation of free units to electricity generators under the scheme is the product of:

                     (a)  the electricity production for the year; and

                     (b)  the electricity generation allocation factor for the year;

                   where:

electricity production for the year means the total number of megawatt hours of electricity generated by the generation unit in the financial year.

electricity generation allocation factor for a year means the amount specified in the following table for the financial year:

 

For the financial year beginning...

Electricity generation allocation factor is

1 July 2011

0.86

1 July 2012

0.83

1 July 2013

0.79

1 July 2014

0.76

1 July 2015

0.73

1 July 2016

0.70

1 July 2017

0.67

1 July 2018

0.63

1 July 2019

0.60

1 July 2020

0.57

1 July 2021

0.54

1 July 2022

0.51

1 July 2023

0.47

1 July 2024

0.44

1 July 2025

0.41

1 July 2026

0.38

1 July 2027

0.35

1 July 2028

0.31

1 July 2029

0.28

1 July 2030

0.25

             (3)  The electricity generation benchmark scheme must provide that free Australian emissions units must not be issued to a person in accordance with the scheme unless the person:

                     (a)  meets such requirements as are specified in the scheme; and

                     (b)  has a Registry account.

             (4)  The Minister must take all reasonable steps to ensure that regulations are made for the purposes of subsection (1) before 1 July 2010.

164D   Relinquishment requirement

             (1)  The electricity generation benchmark scheme may provide that, if:

                     (a)  a number of free Australian emissions units have been issued to a person in accordance with the scheme; and

                     (b)  any of the following subparagraphs applies:

                              (i)  a specified event happens;

                             (ii)  a specified circumstance comes into existence;

                            (iii)  the Authority is satisfied about a specified matter;

the person is required to relinquish a number of Australian emissions units ascertained in accordance with the scheme.

             (2)  Division 3 of Part 15 relating to compliance with relinquishment requirements applies in relation to the scheme as if a reference to the emissions-intensive trade-exposed assistance program was a reference to the electricity generation benchmark scheme.

             (3)  The number of Australian emissions units required to be relinquished by the person must not exceed the number of units mentioned in paragraph (1)(a).

164E   Reporting requirement

Scope

             (1)  This section applies to a person if free Australian emissions units have been issued to the person in accordance with the electricity generation benchmark scheme.

Requirement

             (2)  The electricity generation benchmark scheme may make provision for and in relation to requiring the person to give one or more written reports to the Authority.

164F   Record-keeping requirement

Scope

             (1)  This section applies to a person if free Australian emissions units have been issued to the person in accordance with the electricity generation benchmark scheme.

Requirement

             (2)  The electricity generation benchmark scheme may make provision for and in relation to requiring the person to:

                     (a)  make records of information specified in the scheme; and

                     (b)  retain such a record, or a copy, for 5 years after the record was made.

164G   Other matters

             (1)  The electricity generation benchmark scheme may make provision for and in relation to the following matters:

                     (a)  applications for free Australian emissions units;

                     (b)  the approval by the Authority of a form for such an application;

                     (c)  information that must accompany such an application;

                     (d)  documents that must accompany such an application;

                     (e)  the method of calculating the number of free Australian emissions units to be issued to a person in accordance with the scheme.

             (2)  The electricity generation benchmark scheme may provide that an application for free Australian emissions units must be accompanied by a prescribed report.

             (3)  The electricity generation benchmark scheme may provide for verification by statutory declaration of statements in applications for free Australian emissions units.

164H   Ancillary or incidental provisions

                   The electricity generation benchmark scheme may contain ancillary or incidental provisions.

Division 3 Compliance with reporting and record-keeping requirements under the electricity generation benchmark scheme

164I   Compliance with reporting and record-keeping requirements

Reporting requirements

             (1)  If a person is subject to a requirement under the electricity generation benchmark scheme to give a report to the Authority, the person must comply with that requirement.

Record-keeping requirements

             (2)  If a person is subject to a requirement under the electricity generation benchmark scheme to:

                     (a)  make a record of information; or

                     (b)  retain such a record or a copy;

the person must comply with that requirement.

Ancillary contraventions

             (3)  A person must not:

                     (a)  aid, abet, counsel or procure a contravention of subsection (1) or (2); or

                     (b)  induce, whether by threats or promises or otherwise, a contravention of subsection (1) or (2); or

                     (c)  be in any way, directly or indirectly, knowingly concerned in, or party to, a contravention of subsection (1) or (2); or

                     (d)  conspire with others to effect a contravention of subsection (1) or (2).

Civil penalty provisions

             (4)  Subsections (1), (2) and (3) are civil penalty provisions .

Note:          Part 21 provides for pecuniary penalties for breaches of civil penalty provisions.

[electricity generation benchmark scheme]

Amendments (3) to (7) are consequential to amendment (2)

(3)     Clause 82, page 128 (after line 12), after paragraph (a) under the fourth dot point, insert:

                    (aa)  the total number of free Australian emissions units issued in accordance with the electricity generation benchmark scheme; and

[electricity generation benchmark scheme—consequential]

(4)     Clause 88, page 131 (after line 14), after paragraph (b), insert:

                   (ba)  in accordance with the electricity generation benchmark scheme; or

[electricity generation benchmark scheme—consequential]

(5)     Clause 93, page 136 (after line 29), after paragraph (a), insert:

                    (aa)  the total number of free Australian emissions units with that vintage year issued in accordance with the electricity generation benchmark scheme; and

[electricity generation benchmark scheme—consequential]

(6)     Clause 101, page 141 (after line 23), before subparagraph (1)(a)(i), insert:

                            (ia)  in accordance with the electricity generation benchmark scheme; or

[electricity generation benchmark scheme—consequential]

(7)     Clause 103A, page 143 (after line 29), before subparagraph (1)(a)(i), insert:

                            (ia)  in accordance with the electricity generation benchmark scheme; or

[electricity generation benchmark scheme—consequential]

(8)     Page 204 (after line 4), after Part 7, insert:

Part 7B —National energy efficiency scheme

Division 1 Introduction

164J   Aim, objects and intentions

             (1)  The aim of this Part is to promote and recognise efficiency in the production and supply of energy for use in the residential and commercial sectors of the economy by creating a market for energy efficiency savings.

             (2)  The objects of the scheme embodied in this Part are:

                     (a)  to create incentives for households and business to choose actions that reduce their carbon emissions; and

                     (b)  to deliver energy efficiency that would not have otherwise occurred; and

                     (c)  to ensure that linkages between energy efficiency measures and carbon pollution reduction scheme measures are properly monitored, analysed and accounted for in establishing and achieving the objects of the Act and Australia’s long-term greenhouse gas emission reduction targets.

             (3)  The scheme is intended:

                     (a)  to complement the CPRS, since it is designed to address activities in regard to which the price signal created by the CPRS may not create a strong enough signal; and

                     (b)  to operate separately to the CPRS, so that any emissions reductions that are delivered are additional to those realised through the CPRS; and

                     (c)  to build on similar schemes in State and Territory jurisdictions, with a view to developing a consolidated national approach that harmonises approaches to energy efficiency.

164K   Simplified outline

                   The following is a simplified outline of this Part:

•      The regulations must formulate a scheme, to be known as the national energy efficiency scheme, to create a market for energy efficiency savings across residential and commercial sectors of the economy.

•      The Minister must, by 1 July 2011, undertake a consultation process on the design of the scheme, including consideration of the applicability at a national level of existing state and territory schemes and consultation with key stakeholders.

•      The Minister must take all reasonable steps to ensure that regulations which reflect the outcomes of the consultation process are made by 1 July 2012.

•      The Authority is given additional functions in relation to the formulation and operation of the scheme.

•      Although the principal link between the scheme and the CPRS is in market influences on the carbon price, the Authority may, in any year, determine an energy efficiency adjustment amount, which is an amount by which the Authority determines the national scheme cap number must be reduced to account for energy efficiency savings.

•      If the Authority determines an amount as the energy efficiency adjustment amount for a year, the national scheme cap number for that year is taken to be reduced by that amount.

164L  Interpretation

                   In this Part:

CPRS means the carbon pollution reduction scheme, other than the scheme embodied in this Part.

participant in the scheme means a person who:

                     (a)  creates or deals with white certificates or equivalent property rights under the scheme; or

                     (b)  is a liable scheme entity.

scheme means the national energy efficiency scheme formulated in accordance with section 164M.

Division 2 —Formulation of the national energy efficiency scheme

164M  National energy efficiency scheme

             (1)  The regulations must formulate a scheme (to be known as the national energy efficiency scheme ) to create a market for energy efficiency savings in the production and supply of energy for use in the residential and commercial sectors of the economy.

             (2)  Without otherwise limiting the design of the scheme, the scheme must encompass:

                     (a)  either:

                              (i)  the creation of tradable certificates representing energy efficiency savings ( white certificates ); or

                             (ii)  another process for creating and trading verifiable property rights over particular energy efficiency savings ( equivalent property rights ); and

                     (b)  the imposition of energy efficiency targets on liable scheme entities, which entities can meet by creating or trading white certificates or equivalent property rights; and

                     (c)  the imposition of penalties for liable scheme entities which do not meet energy efficiency targets;

                     (d)  procedures for the implementation and oversight of the scheme by the Authority.

164N  Consultation on the formulation of the scheme

             (1)  The Minister must, by 1 July 2011, undertake a consultative policy development process, with the aims of:

                     (a)  formulating a national energy efficiency scheme;

                     (b)  determining a method of setting energy efficiency targets under the scheme;

                     (c)  developing the administrative requirements to implement the scheme.

             (2)  The consultation process must, at a minimum, include:

                     (a)  consultation with each of the States and Territories;

                     (b)  consideration of the applicability at a national level of:

                              (i)  the Greenhouse Gas Reduction Scheme, operating in New South Wales and the ACT; and

                             (ii)  the Victorian Energy Efficiency Target Scheme; and

                            (iii)  the South Australian Residential Energy Efficiency Scheme; and

                            (iv)  the New South Wales Energy Efficiency Scheme; and

                             (v)  any equivalent scheme operating or planned to operate in any other State or Territory jurisdiction during 2010;

                     (c)  consultation with key stakeholders.

164O  Implementation

                   The Minister must take all reasonable steps to ensure that regulations which reflect the outcomes of the consultation process are made by 1 July 2012.

164P  Functions of the Authority—formulation of the scheme

                   The Authority has the following functions in relation to the formulation of the scheme:

                     (a)  assisting the Minister in the consultation process;

                     (b)  reviewing the operation of the scheme, and reporting to the Minister and the Parliament on the operation of the scheme at least every 2 years;

                     (c)  making recommendations to the Minister on matters of policy relating to the operation of the scheme;

                     (d)  any other function prescribed by the regulations for the purposes of this paragraph.

164Q  Elements of the scheme

             (1)  Without limiting the design of the scheme, the regulations may prescribe:

                     (a)  which entities may create and deal with white certificates or equivalent property rights;

                     (b)  procedures for the accreditation of such entities;

                     (c)  the eligible activities through which white certificates or equivalent property rights may be created;

                     (d)  the manner in which white certificates or equivalent property rights may be traded and otherwise dealt with;

                     (e)  which entities are liable under the scheme ( liable scheme entities );

                      (f)  methods of estimating or calculating:

                              (i)  energy efficiency savings made under the scheme; and

                             (ii)  the effect of the scheme on the price of carbon;

                      (f)  procedures for the transfer of property rights in energy efficiency savings between the scheme and State or Territory schemes dealing with energy efficiency;

                     (g)  reporting and compliance protocols.

             (2)  Without limiting the generality of paragraph (1)(e), the definition of liable scheme entities may include (but is not limited to) entities which produce or supply electricity, gas and oil for use in the residential and commercial sectors of the economy.

164R   Ancillary or incidental provisions

                   The scheme may contain ancillary or incidental provisions.

Division 3 —Operation of the national energy efficiency scheme

164S  Functions of the Authority—operation of the scheme

             (1)  The Authority has the following functions in relation to the operation of the scheme:

                     (a)  to certify entities for the purposes of the scheme;

                     (b)  to determine, in writing, energy efficiency savings targets to be met under the scheme;

                     (c)  to verify energy efficiency savings and ensure that the benefit of property rights in relation to particular savings are not accounted for elsewhere;

                     (d)  to monitor, analyse and report on energy efficiency savings;

                     (e)  any other function prescribed by the regulations for the purposes of this paragraph.

             (2)  A determination under paragraph (1)(b) is not a legislative instrument.

164T  Links between energy efficiency and the CPRS

             (1)  The principal link between the scheme and the CPRS is intended to be reflected in market influences on the carbon price.

             (2)  However, the Authority may, in any year, determine, in writing, an energy efficiency adjustment amount for that year.

             (3)  A determination under subsection (2) is not a legislative instrument.

             (4)  The energy efficiency adjustment amount for any year is an amount by which the Authority determines the national scheme cap number for the following year must be reduced to account for energy efficiency savings made under the scheme.

             (5)  The regulations may prescribe any of the following:

                     (a)  factors the Authority may take into account in making such a determination;

                     (b)  factors the Authority must take into account in making such a determination;

                     (c)  a method of calculating the energy efficiency adjustment amount for a year.

             (6)  The Authority may determine that there is no energy efficiency adjustment amount for a particular year.

164U  Adjustment of national scheme cap number

                   Despite any other provision of the carbon pollution reduction scheme, if the Authority determines an amount as the energy efficiency adjustment amount for a year, the national scheme cap number for the following year is taken to be reduced by that amount.

Division 4 —R eporting and record-keeping requirements

164V   Reporting and record-keeping requirements

             (1)  The scheme may make provision for and in relation to requiring a person who is a participant in the scheme to give one or more written reports to the Authority.

             (2)  The scheme may make provision for and in relation to requiring a person who is a participant in the scheme to:

                     (a)  make records of information specified in the scheme; and

                     (b)  retain such a record, or a copy, for 5 years after the record was made.

164W   Compliance with reporting and record-keeping requirements

Reporting requirements

             (1)  If a person is subject to a requirement under the scheme to give a report to the Authority, the person must comply with that requirement.

Record-keeping requirements

             (2)  If a person is subject to a requirement under the scheme to:

                     (a)  make a record of information; or

                     (b)  retain such a record or a copy;

the person must comply with that requirement.

Ancillary contraventions

             (3)  A person must not:

                     (a)  aid, abet, counsel or procure a contravention of subsection (1) or (2); or

                     (b)  induce, whether by threats or promises or otherwise, a contravention of subsection (1) or (2); or

                     (c)  be in any way, directly or indirectly, knowingly concerned in, or party to, a contravention of subsection (1) or (2); or

                     (d)  conspire with others to effect a contravention of subsection (1) or (2).

Civil penalty provisions

             (4)  Subsections (1), (2) and (3) are civil penalty provisions .

Note:          Part 21 provides for pecuniary penalties for breaches of civil penalty provisions.

[ national energy efficiency scheme ]

(9)     Clause 167, page 207 (after line 10), after subclause (1), insert:

          (1C)  The regulations must determine coal mining to be an emissions-intensive trade-exposed activity.

[inclusion of all emissions from coal mining]

(10)   Clause 167, page 207 (after line 10), after subclause (1), insert:

          (1D)  For the purposes of regulations made under subsection (1):

                     (a)  emissions-intensity must be assessed in relation to whether the industry-wide weighted average emissions intensity of an activity is above a threshold of:

                              (i)  1,000 tonnes of carbon dioxide equivalent per $1,000,000 of revenue; or

                             (ii)  3,000 tonnes of carbon dioxide equivalent per $1,000,000 of value added; and

                     (b)  assistance to eligible activities must be set at 100% of the emissions-intensive trade-exposed electricity allocative baseline for activities that have an emissions intensity above the threshold in the assessment period; and

                     (c)  the level of assistance to an eligible activity continues to apply to that activity until there is a comprehensive international agreement in relation to carbon pricing.

[single threshold for EITE activities;

100% assistance; no change in rate of assistance]

(11)   Clause 167, page 207 (after line 10), after subclause (1), insert:

          (1E)  The emissions-intensive trade-exposed electricity allocation factor for a year is:

                                   1   -     electricity generation allocation factor for that year.

[electricity benchmark allocation]

(12)   Clause 167, page 207 (after line 10), after subclause (1), insert:

           (1F)  The emissions-intensive trade-exposed assistance program must provide that within 2 months of being issued with free Australian emissions units for a year in accordance with the program, the person to whom the units are issued must prepare a business plan in relation to the activity and submit it to the Minister.

          (1G)  A business plan prepared under subsection (1F) must demonstrate:

                     (a)  a commitment to reducing carbon emissions in relation to the activity; and

                     (b)  that there will not be a net reduction in jobs in relation to the activity, other than as a result of investment in new technologies.

          (1H)  A person who has submitted a business plan under subsection (1F) must submit a progress report on its implementation by the end of 10 months after the day on which free Australian emissions units were issued to the person.

           (1I)  The Minister must within 30 days assess a progress report submitted under subsection (1H) in accordance with assessment criteria specified in the regulations and determine whether or not the objectives of the business plan are being met.

           (1J)  If the Minister determines under subsection (1I) that the objectives of a business plan are not being met, the Minister may determine that the person is required under section 168 to relinquish all of, or a proportion of, the free Australian emissions units issued to the person for that year.

          (1K)  If the Minister determines under subsection (1I) that the objectives of a business plan are being met only in part, the Minister may determine that the person is required under section 168 to relinquish a proportion of the free Australian emissions units issued to the person for that year.

[viability requirements]